Using System Dynamics to Analyze Innovation Diffusion Processes within Intra-organizational Networks

Abstract

The purpose of this study is to introduce system dynamics as a methodology to analyze intra-organizational innovation diffusion processes. Therefore, a purely algebraic model is replicated and analyzed in a system dynamics environment before it is extended by relaxing the restrictive assumption that intra-group diffusion and inter-group diffusion take place consecutively. The findings of this study suggest that the parallel occurrence of intra-group and inter-group diffusion can change the outcome of the diffusion process significantly. In addition, system dynamics is used to illustrate and analyze the complex dynamics of the diffusion process. The interplay between the self-reinforcing dynamics of intra-group diffusion and the balancing dynamics of inter-group diffusion is heavily influenced by the structure of the network. The simulations suggest that adopter-dominated groups should be connected to each other while non-adopter-dominated groups should be isolated from each other in order to increase the probability and speed of successful innovation diffusions. Major limitations of the study are that only one network structure between groups was examined and that all groups are considered to be homogeneous.